Intel today reported a bumper first quarter of the year, with a big shift to homeworking worldwide partially fueling double-digit growth of its PC processor sales.
Chipzilla said its long-running shortage of consumer parts was over, leading to PC manufacturers snapping up its components amid growing demand. This, along with its usual big numbers from the data center world, helped it file financial figures that would make any accountant cheerful. For the first quarter of 2020, ending March 28:
- Revenues of $19.8bn, up 23 per cent year-on-year from $16.1bn in Q1 2019, and topping analyst estimates of $18.7bn.
- Net income was $5.7bn, up 42 per cent from the year-ago's $4bn haul, or about $63m a day in profit on average for the quarter.
- Non-GAAP earnings per share of $1.45 rose 63 per cent from $0.89 last year, and came in well ahead of estimates of $1.28 from analysts.
- Data center revenues of $7bn was up 43 per cent from $5bn last year.
- Client computing (PCs) revenues of $9.8bn were up 14 per cent from last year's $8.6bn. Intel expects a solid market for PCs thanks to so many employers, workers, and students buying new machines to comfortably work and study from home during the global coronavirus outbreak. The tech giant had anticipated higher revenues anyway, as it was set to finally ship volumes of its chips to personal computer manufacturers, driving up sales.
- IoT revenues of $1.14bn were up two per cent from last year's $1.12bn. Non-volatile memory revenues were $1.3bn, up 42 per cent from $915m. Programmable solutions brought in $519m, up a smidge from $486m.
- Execs said Chipzilla was going to be able to meet customer CPU demand this quarter, and was still working to build up its back stock after several quarters of shortages.
- As with other chipmakers, the largely automated nature of semiconductor fabrication has allowed allowed Intel to maintain good output despite the coronavirus pandemic, delivering around 90 per cent of expected production from its factories.
- Work on the 10nm Tiger Lake microprocessors, destined for Project Athena laptops this year, is set to ramp up in the coming months with an aim on having the full-line out for the holiday season. Then again, Intel is flexible with its own deadlines.
- Q2 forecasts call for revenues of $18.5bn, significantly better than the $17.95bn analysts see for Intel, and a 30 per cent operating margin versus Q1's fat 60 per cent. Don't expect a prediction much further out than that, however. Thanks to the pandemic, Chipzilla is calling off its full-year outlook.
"Our first-quarter performance is a testament to our team's focus on safeguarding employees, supporting our supply chain partners and delivering for our customers during this unprecedented challenge,” Intel boss Bob Swan said.
“The role technology plays in the world is more essential now than it has ever been, and our opportunity to enrich lives and enable our customers' success has never been more vital. Guided by our cultural values, competitive advantages and financial strength, I am confident we will emerge from this situation an even stronger company."
While the strong data center numbers are going to thrill Intel, where it has a near-100-per-cent monopoly on x86 compute, it's also going to be happy with growth in the PC market. Speaking on the numbers with industry analysts, CFO George Davis credited the gain to a mixture of remote work demands and the end of the desktop processor shortage. A shortage, we note, caused by Intel focusing production on its expensive high-margin microprocessors and a working 10nm node, and away from its low-margin offerings.
"What we saw is clearly some impact relative to our expectation from the work from home and learn from home dynamics, but we had expected a strong quarter in our initial forecast," Davis noted in a conference call. "We had customers who had been short of demand for a number of quarters who finally had a chance to build inventory, which gave us a relatively strong first quarter."
The long-term uncertainty, however, does not seem to be sitting well with investors. Intel shares were down five per cent at $56 apiece in after-hours trading – though rumors of Apple using homegrown Arm-based chips in next year's MacBooks may have contributed to that drop.
Industry analyst Patrick Moorhead, of Moor Insights and Strategy, told us: "Intel had a stellar Q1 revenue-wise ... PCs were up 14 per cent driven by strong sell-in to meet anticipated demand from work/school/govern-from-home orders.
"Like other tech giants, Intel pulled its annual guide, but it did keep it for Q2, which I thought was pretty good. I think investors will want to know more about the gross margin per cent drop in Q2, but I think it's likely costs associated with 10nm Tiger Lake qualification." ®